Competitive Markets Not Supportive Of New Nuclear Development, Warns Report

26 Oct (NucNet): The UK government needs to decide whether and how to proceed with its nuclear policies, because the nature of the costs, the time horizons, and the societal decisions about risk and waste make investments in nuclear always a matter for the state, said an independent report commissioned by the British government’s Department for Business, Energy and Industrial Strategy (BEIS). The report was prepared by Professor Dieter Helm on behalf of BEIS and found that unless markets expect fossil fuel prices to rise very sharply, and markets are prepared to offer long-term contracts to match such projections, nuclear will not be developed by competitive market mechanisms. According to the report, existing fossil fuel technologies are highly unlikely to become low- or even zero-carbon, while carbon capture and storage will not be a large-scale option for several decades. The report also said that “the other alternative”, nuclear, shows no global signs of coming to the climate change rescue at a scale necessary to displace coal- and gas-fired generation in the near future. However, the UK’s plans to build about 13 GW of new nuclear by the early 2030s could at least replace existing nuclear capacity, which is set to go into retirement at a time of rising electricity demand. “Critical to this is how, to what extent, and by when the government’s nuclear ambitions are delivered – both the amount of new capacity that will be built, and the uncertainty about precisely when it will come on stream”, the report said. The risk of failing to replace 13 GW of retiring nuclear capacity in the 2030s is an “enormous uncertainty” for the UK system operator to handle, the report said. Therefore, the report recommended that the government should urgently give guidance to the system operator on the measures it should take to mitigate such a large-scale system risk, and the extent to which extra capacity should be auctioned “just in case” new nuclear is either late or not delivered. Failure to do so could result in sharp spikes in the wholesale electricity market, the report warned. The report is online: http://bit.ly/2yNIG8o